I started my career with a degree in psychology and a professional goal of becoming a) a best-selling author or b) something that helps people somehow. By luck, fate, or something else, I ended up mentoring under a pioneer of applied behavioral science, and learned some of the most powerful performance management practices I’ve encountered to date. I thought I was diverting from my chosen path into the business world for a ‘little while’. What I ended up discovering was that understanding how to improve individual performance in a business absolutely helps people, improves lives, builds companies, and makes a difference.
There are many ways to look at performance management. I recommend a twofold approach. First, I like to train new (and even seasoned) managers on the basics of your profit and loss statement. I’ve found through the years that this is worth reviewing even with long-time managers, because sometimes there is not the clarity you think and it’s often the case that your managers won’t tell you if they don’t understand something. Make sure everyone understands your revenue lines, your costs of goods sold, and particularly the labor line items. They should also be educated on gross profit, operating expenses, net income, and EBITDA. Some company owners are uncomfortable sharing all the financial information, and some prefer open book management. Regardless of your preference, sharing the how’s of a P&L will enable your managers to make better decisions, and to start looking at the business as a business, and not a bottomless well.
Once managers have a strong business understanding, you can introduce a more robust performance management system. This intervention is where my team and I get the most excited, because this is where you get to make more money, keep more money, experience less stress, invest more in your people, and start loving your business again. In other words, this is where the fun is!
Performance management (as we teach it) is based on the understanding that a business – any business – is comprised of the activities performed by the employees. The goal of performance management is to clarify your business outcomes, identify the milestones, and map out the steps needed to hit the milestones. Once that’s done, we look for the ‘tracks’ that proper task achievements leave, figure out the most effective way to measure them, and provide feedback on those measurements to each individual employee.
If it sounds like work-process mapping, it is. If it sounds like behavior-based training, it is. If it sounds like individual performance metrics, it is. If it sounds like individual, team, and departmental key performance indicators, it is. If it sounds like the only proven way I’ve ever seen to drive double digit improvements in top and bottom line performance, it’s that too. But it’s more than that.
What I love (love, love) most about performance management is that at the end of the day it’s connecting employees to the big picture of the company, and about connecting managers with their employees. It means making sure important conversations are happening. It means that great performance gets recognized, not taken for granted. It also means that people who need help, receive it. It’s also exciting, because while there are certain predictabilities (like, you as the owner will be super frustrated at the first set of metrics because of how hard they were to get, and how much less is happening than you assumed) there are also always exciting gains, and huge increases in morale as employees come together to solve problems, figure out the best ways to do something, and feel heard.
So, while the best-selling author thing is still a work in progress, doing something that helps people has become a reality, and it’s even better than I thought it would be!
If you found this article helpful, you may also be interested in the three things you should train all your new managers (one of which is performance management, of course). If you believe your small or growing business could benefit from performance management, or other management training, please feel free to email me and we can chat.
Carrie Maldonado is the founder of Today’s Leadership Solutions, a Seattle-based consulting firm providing comprehensive organizational development solutions for companies who are growing and who truly value their people. With certified Executive Coaches, Organizational Behavior Management (OBM) practitioners, SPHR-certified HR professionals, and Organizational Development Specialists, Carrie’s team brings a unique perspective and a cross-functional approach to providing workplace solutions that work. Carrie can be reached for consultation at firstname.lastname@example.org